COMMUNITY INVESTMENT TAX RELIEF: UPDATE
The HM Revenue and Customs (HMRC) have recently updated their guidance concerning CICs and Community Investment Tax Relief (CITR).
CITR is a tax relief* available to individuals and corporate bodies investing in CITR accredited institutions called Community Development Finance Institutions. These CDFIs then provide finance** to qualifying profit-distributing enterprises***, social enterprises or community projects in disadvantaged communities that are excluded from mainstream sources of finance. Further information on CITR can be found in HMRC’s CITR Manual .
The new guidance clarifies that the maximum amount for on-lending to a Community Interest Company is now £250,000.
If you are having difficulties raising commercial finance for your CIC then search http://www.cdfa.org.uk/cmdirec.php and talk to your local CDFI.
* The tax relief available to the investor is five per cent per annum of the amount invested in the CDFI and may be claimed in the tax year in which the investment is made and in each of the four subsequent years.
** Please note that interest will be charged on all loans issued by CDFIs. Contact your nearest CDFI for individual rates.
*** Companies registered as community interest companies will be regarded as non-profit-distributing enterprises for the purposes of CITR.